Looks like we all talk about this roughly every 5 years, so here was my discussion on this from 2015: https://arindube.com/2015/04/19/public-assistance-private-subsidies-and-low-wage-jobs/

I mostly agree with Ioana. At the same time, I think there is a bit more nuance here that's worth exploring.

1/ https://twitter.com/mioana/status/1338499373324439552

If you have a single type of employer (E) and unemployment (U), and those at U qualify for more SNAP than those at E, then ↑ in SNAP -> ↑ outside option for workers -> ↑ wages (at least weakly so).

This was my point in 2015, and what Ioana points about above.

2/

Now consider 1) high-wage (HW) job, 2) low-wage (LW) job, and 3) unemployment U. SNAP benefits are highest for U, moderate for LW, and zero for HW.

Now, an ↑ in SNAP value ↑ the *post-transfer* wage of a LW job relative to HW job.

3/

In this case ↑ in SNAP has contradictory effects on wages at LW. The ↑ in unemployment value tends to ↑ wage at LW employer. But in the job ladder, big source of competition for LW is workers leaving to HW. A ↑ in SNAP ↓ this pressure by raising post-transfer wage at LW.

4/

So if the primary competitive pressure on LW is "from above," then a ↑ in SNAP can lower wages at LW and "subsidize" LW over HW jobs. But if primary competitive pressure on LW is "from below" then LW wages would ↑.

5/

Moreover, note that in any case a ↑ in SNAP will likely put ↑ wage pressure on HW jobs.

So that's my 2020 nuanced take in terms of how SNAP or other means tested pub assistance affect wages. Overall likely to raise wages, but can in some cases subsidize LW over HW jobs.

6/

FWIW, some of this came up in a conversation I had with @rothstein_jesse after I wrote that 2015 blog post. We were going to write something up along these lines but I don't believe we ever did!

7/7

Tagging some folks who have commented on this: @mioana @furman